AlwaysFree: Indonesia Wins $20bn In G-7, Other Support To Speed Net Zero Push

• Deal for G-20 chair 'arguably largest ever' country-specific climate partnership

According to Nikkei Asia article published on November 15, 2022, Indonesia has obtained at least $20 billion in funding commitments from developed nations led by the United States and Japan to speed up its clean energy transition and move forward its net zero carbon pledge by 10 years.

All members of the Group of Seven advanced economies plus Denmark and Norway, on Tuesday launched the Just Energy Transition Partnership (JETP) specifically for the Southeast Asian country. They intend to mobilize an initial $20 billion in public and private financing over the next three to five years to help it significantly reduce its greenhouse gas emissions.

"It is arguably the single largest country-specific climate investment partnership ever," John Morton, climate counselor to the U.S. treasury secretary, told a news conference on the JETP launch held on the first day of the Group of 20 summit of advanced and emerging economies on the Indonesian island of Bali. Indonesia currently holds the G-20 presidency.

"Over the next six months, we will work with Indonesia to develop a comprehensive investment plan" on the JETP, Morton said.

The partnership aims to help Indonesia reach its total power sector emissions peak by 2030 -- seven years earlier than currently projected -- and cap carbon dioxide emissions at 290 megatonnes by that year, which would be down from a baseline value of 357 megatonnes. Morton said it is "equivalenttaking half the U.S. passenger cars off the road for one year."

JETP also seeks to accelerate deployment of renewable energy so it will make up 34% of Indonesia's total power generation by 2030, up from the current 11%. That would "roughly double the total renewables deployment over the course of this decade compared to current plan," according to a joint statement on the launch.

Overall, the financing support is expected to help Indonesia reach its net zero emissions target by 2050, a decade earlier than the 2060 goal President Joko Widodo declared last year.

The JETP fund will use a mix of grants, concessional loans, market-rate loans, guarantees and private investments, the joint statement said.

It added that contributions to the fund include $10 billion in public sector pledges and a commitment to mobilize and facilitate $10 billion in private investment from an initial set of private financial institutions coordinated by the Glasgow Financial Alliance for Net Zero. That includes such global names as Bank of America, Citi, Deutsche Bank, HSBC, Macquarie, MUFG and Standard Chartered. The partnership will also "leverage the expertise, resources, and operations of the multilateral development banks."

Luhut Pandjaitan, Indonesia's coordinating minister for maritime and investment affairs, called the partnership a "historic" move.

"Being the largest archipelagic nation in the world, Indonesia has an important role to play in avoiding the worst impact of climate changeour country, our people and the environment," Pandjaitan told the news conference.

Meanwhile, the Asian Development Bank is teaming up with the Indonesian government and a private energy company to help retire a major coal-fired power plant early, kicking off a program it hopes will accelerate Southeast Asia's shift to renewable energy.

Announced on Monday in advance of the G-20 summit, the move is the first stage in the development bank's long-touted Energy Transition Mechanism (ETM) -- an initiative to blend private and public finance to buy or refinance coal power plants to close them ahead of the end of their expected life spans.

Coal, one of the world's dirtiest fuels, remains a major power source for many emerging economies in Asia and elsewhere due to its relatively abundant supply. The ADB is looking to help drive change to other kinds of energy such as solar or wind to clear the region's skies and rein in climate change.

"could become the biggest decarbonization initiative the world has seen," Warren Evans, the ADB's climate change envoy, told Nikkei Asia last week, ahead of the announcement about the Indonesian plant.

Under a memorandum of understanding, the ADB, Indonesia's government, Indonesia's state electricity distributor and the operator of the 660-megawatt Cirebon 1 power plant in West Java have agreed to open detailed discussions to speed up the retirement of the site with the help of financing."

Although potential time frames are still being worked out, the regional lender estimates that shutting the station 15 years early would cut an estimated 30 million tonnes of carbon emissions. The plant is currently contracted to run until 2042, though its technical life could be 10 to 20 years on top of that.

A final agreement is expected next year and is likely to include financing of around $250 million to $300 million, according to the ADB. 

The bank also said that the ETM is closely related to the JETP for Indonesia. "There is expectation for ETM to be one of the key delivery mechanisms to ensure successful implementation of JETP," it said in press material for the ETM announcement.

The bank's broader aim is to roll out the ETM over the next two to three years "in a major way," Evans said in an interview at the COP27 climate summit in Egypt, with other power stations in Indonesia and the Philippines already on the radar. The plan is to "go to scale, fast," he said.

"You can't have development that's sustainable without absolutely integrating climate into everything," Evans said.

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